Incorporation

In corporate law, incorporation is the process by which a business or organization becomes a legal corporation, a separate legal entity from its owners. Upon incorporation, the entity gains legal personality, can own property, enter into contracts, sue and be sued, and continue beyond the life of its founders. The decision to incorporate is governed by jurisdiction-specific corporate statutes.

The typical steps include selecting a name, filing articles of incorporation or a charter with the appropriate government authority, paying fees, and designating an initial board of directors. The filing often requires a registered agent and a principal office. After incorporation, corporate bylaws are adopted to govern internal affairs.

Key consequences include limited liability for shareholders, meaning personal assets are generally protected from the corporation's liabilities; a distinct legal entity can enter contracts and own assets; the entity may have perpetual existence and the ability to issue shares.

Advantages include easier access to capital through stock, transferability of ownership, potential tax planning options, and enhanced credibility. Disadvantages include ongoing regulatory compliance, reporting requirements, corporate formalities, and potential double taxation for certain corporate structures in some jurisdictions.

There are variations by jurisdiction and type, including for-profit corporations, nonprofit corporations, and professional corporations. Some systems provide special forms with distinct tax or governance rules.